When you take out a loan with real estate as collateral, you usually sign a Promissory Note and Deed of Trust. The Deed of Trust is then recorded and the Promissory Note is held by the person/entity you have the loan with. When the loan is paid off, the person/entity will either record the Release Deed of Trust or send you the executed Release Deed of Trust and original Promissory Note (marked “Paid in Full”). It’s very important that the Release Deed of Trust is recorded – this happens at the County Treasurer’s office where the Deed of Trust was recorded. If you do not receive confirmation this has been completed, reach out to the person/entity your loan was with. You could also contact the County Treasurer’s office or Clerk and Recorder’s Office and ask them if the release was recorded.
It’s very important to make sure this Release Deed of Trust is recorded to keep the title to your property clean, and so that if you sell the property there are no outstanding loans against the property that have already been paid off. Also, there are times people find original Notes or Deeds of Trust after a person’s passing and think money is owed.
Inversely, when you buy property, it’s important to make sure there are no outstanding loans on the property. If there are outstanding loans, you, as a buyer need those paid off before you buy (or the property could have a lien on it from a prior owner).
Bottom line – after paying off ANY loan, whether for property, machinery, vehicle, etc., make sure you receive recorded releases and notes. Don’t get rid of any of these documents, you may need them to prove the loan is paid in full someday.
